Stonebridge carves out Canada’s first infra debt fund

The Stonebridge Infrastructure Debt Fund aims to hold a first close in mid-December with over C$200m of pension fund money. The fund, designed together with pension advisor PBI Actuarial Consultant and PPP Canada, is targeting a C$350m plus final close.

The prevailing low interest rate environment is fuelling new entrants into the infrastructure debt space. The latest is Canadian financial services firm Stonebridge Financial Corporation, which yesterday announced the launch of a Canada-focused infrastructure debt fund.

The Stonebridge Infrastructure Debt Fund, as the vehicle is called, aims to raise more than C$350 million (€251 million; $336 million) to provide “long-term, fixed rate, senior debt financing for the construction and operation of infrastructure and energy assets, including the emerging municipal infrastructure project sector,” Stonebridge said in a statement. 

A mid-December first close on more than $200 million of pension money is currently scheduled, with a further closing earmarked for mid-2012 to “accommodate other interested investors”. The fund was designed together with Canadian pension adviser PBI Actuarial Consultants and PPP Canada.

“In the current low interest rate environment and given the turbulence in the capital markets, the security, liability matching characteristics and the return potential of infrastructure debt is quite attractive,” Tony Williams, PBI’s president, commented in a statement. “PBI saw the potential advantages for long-term investors in infrastructure debt, but there were no similar funds in the market,” he added.

Recently, JP Morgan Asset Management, the asset management unit of the US investment bank, announced it was setting up a dedicated infrastructure debt team led by Bob Dewing, a former senior executive at Citigroup. Echoing Williams, Gary Madich, chief investment officer of JP Morgan’s Global Fixed Income Group, also drew interest to the low interest rate environment: 

“Our institutional clients are increasingly seeking sophisticated means of generating returns in this low interest rate environment and accessing infrastructure debt may be attractive to investors attuned to long-term, strategic inflation protection, particularly pension plans and foundation endowments.”